Successful HR Strategies for Building an Ethical Workplace Culture · 2016-08-19 · Successful HR Strategies for Building an Ethical Workplace Culture ... Elements of an Ethical

©SHRM 2016

1

Successful HR Strategies for Building

an Ethical Workplace Culture

Laurie McIntosh, SHRM-SCP, CAE

SHRM Director, Membership

August 18, 2016

©SHRM 2016

2Today’s Agenda

1) Current State of Workplace Ethics

2) Why Good Ethics are Good for Business

3) Elements of an Ethical Workplace Culture

4) HR Strategies for Building an Ethical Workplace Culture

5) Importance of Ethical Practice as an HR Competency

©SHRM 2016

3Current State of Workplace Ethics

In 2013 JPMorgan Chase paid the US

Government $13 billion to settle charges that

its conduct had contributed to the mortgage

meltdown and Great Recession of 2007-09

More than half of the 10 largest corporate

bankruptcies since 1980 resulted from

unethical practices, costing owners and the US

economy $1.228 trillion

Big Business scandals

©SHRM 2016


Lack of Trust in Leaders

Edelman Trust Barometer: Only 15

percent of Americans trust business

leaders to tell the truth

Globally, only 28% of the 30,000+

Edelman respondents believe that

businesses follow ethical practices

©SHRM 2016

Current State of Workplace Ethics 5

ERC 2013 National Business Ethics Survey

“The steady and sharp drop in

misconduct since 2007 suggests that

something both fundamental and

good is taking place in the way

Americans conduct themselves at

work.”

National Business Ethics Survey

Ethics Resource Center

©SHRM 2016

Current State of Workplace Ethics6

2014 ERC National Business Ethics Survey

©SHRM 2016

Current State of Workplace Ethics7


©SHRM 2016



Good news: Companies with “strong” or

“strong-leaning” ethics cultures grew from 60%

in 2011 to 66% in 2013

Only 20% of workers in companies where

ethical cultures were “strong” reported

observing misconduct, while 88% observed

misconduct in companies with the weakest

cultures

©SHRM 2016

9Good Ethics = Good Business

An Ethical Culture Brings Higher Performance

The stock price growth of the 100 firms

with the most ethical cultures

outperformed stock market and peer

indices by almost 200% from 1997-2013

1997-2013, the stock price of the Fortune

100 Best Companies to Work For in the

US grew 11.8%, compared to 6% for the

S&P 500 and 6.4% for the Russell index

Source: Great Place to Work Institute 2014

©SHRM 2016


An Ethical Culture Brings Competitive Advantage

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• Higher employee job satisfaction

• Increased legal/rule compliance

• Increased organizational commitment

• Increased cooperation

• Increased change management success

• Increased attraction of high-potential talent

• Lower turnover

• Lower health care costs

An Ethical Culture Benefits Employees and Management

©SHRM 2016

12Elements of an Ethical Culture

2014 SHRM Foundation report,

Shaping an Ethical Workplace

Culture, gives a full picture of

what an ethical workplace means

and how it can benefit diverse

organizations

www.shrm.org/foundation

http://www.shrm.org/foundation.org

©SHRM 2016


“Ethics – the values an organization demonstrates in its

goals, policies, and practices – are the heart of any

workplace culture. And, the quality of experience in an

organization depends on the quality of the culture.

Whether we are employees, customers, or clients, a

positive culture enlivens our experience of a firm – and

a negative culture diminishes it.”

Steven D. Olson

Shaping an Ethical Workplace Culture

SHRM Foundation 2014 EPG Report

©SHRM 2016


Ethical Culture Hallmarks

1) Leaders live by clear standards and self-transcending principles when

conducting the organization's business.

2) Employees feel genuinely cared for and respected.

3) Employees, regardless of rank or role, put the work at hand and the interests

of others above themselves.

4) Employees feel empowered and energized to reach for ethical and technical

excellence in serving customers, clients, and each other.

5) Employees hold themselves and their managers accountable to

uncompromising standards of conduct.

6) People at all levels move toward, not away from, ethical dilemmas and

conflicts in order to address them through self-transcending ideals.

7) Ethical lessons learned during conflicts alter the organization's practices,

setting in motion a virtuous cycle of improvement

Source: April 2014 HR Magazine article: “Creating an Ethical Culture” by Dori Meinert

©SHRM 2016

Six Basic Elements


Ethical Business Culture

1- Written Standards 2- Ethics Training

3- Internal Reporting

Mechanism

4- Means to Report

Anonymously

6- Ethics Inclusion in

Performance Rating

5- Discipline for

Misconduct

Source: US Sentencing Commission FSGO guidelines

©SHRM 2016


Written Standards

Values statements: Reflect an

organization’s guiding principles

Codes of conduct: Reflect an

organization’s values and provide

guidelines employees should follow

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Ethics Training

Training and development

programs at organizations with

ethical cultures emphasize

character formation, resolution of

conflicting values, and a “calling”

orientation towards work and career

©SHRM 2016


Internal Reporting/Advice Mechanism

Organizations should have an internal

mechanism with options for employees to

report or seek advice about possible legal or

code of conduct violations

Employees are encouraged to report their

concerns internally to their supervisor or

manager and, if they are not comfortable

with this option, to contact their Employee

Relations Manager or their HR team

©SHRM 2016


Anonymous Reporting Mechanism

Organizations should also have a confidential,

anonymous hotline for employees not

comfortable with using the internal mechanism

SHRM’s hotline is conducted by a third party

ethics hotline, which provides 24 hour toll-free

telephone and internet service to answer,

report and track ethics concerns

©SHRM 2016


Discipline for Misconduct

HR and legal departments normally review

ethics complaints and decide on the appropriate

action

The organization’s code of conduct should make

clear that violators may be subject to discipline

up to and including termination of employment

and even possible civil or criminal penalties

No retaliation should be permitted against

anyone who reports a suspected violation

©SHRM 2016


Ethics in Performance Rating

Organizations should include measures of

ethical behavior in performance ratings to help

focus employees’ attention on its importance

Doing so serves as a tool to reward those who

excel in this area and to incentivize all

employees to strive for high ethical behavior

©SHRM 2016


Compliance with Legal Regulations

Sarbanes-Oxley Act of 2002

Passed by Congress after major scandals

Publicly-traded companies must have adequate

internal control structure and procedures for

financial reporting

They must also have a code of conduct, a

complaint system, an anti-retaliation statement,

ethics training, and a system to protect

whistleblowers

http://chattahbox.com/images/2009/02/congress.jpg


©SHRM 2016


Compliance with Legal Regulations

Foreign Corrupt Practices Act of 1977

Prohibited payments: Offers, payments, or gifts

to foreign government officials, parties, or

candidates to obtain or retain business

Accounting standards: Keep books, records, and

accounts in detail, accurately reflecting

transactions and corporate asset disposition

Applies to: US citizens and residents, US

companies and employees, and US citizens

involved in foreign subsidiary activities



©SHRM 2016

24HR Ethical Culture Strategies

Leadership Role of HR

HR is in a unique position to lead in

strategies to build an ethical

workplace culture

HR professionals should be both

guardians and champions of the

ethical culture in their organizations

©SHRM 2016


Assess your Workplace Culture

Measure 3 Factors:

Ethical Content

Ethical Operations

Ethical Individuals

©SHRM 2016


Assess Your Workplace Culture

©SHRM 2016


Use Organizational Levers

1) Onboarding

2) Ethics and Compliance Programs

3) Pay, Performance, Promotion, Procedures

4) Leadership Role-modeling

5) Training and Development

6) Workplace Communications and Routines

7) Culture Surveys and Feedback Tools

©SHRM 2016


Onboarding

The best place to start shaping an ethical

workplace is at the beginning of each

employee’s experience with your organization

In addition to framing your organization’s

ethical guidelines, examples from your own

case files can be used to help new employees

understand exactly what is expected of them

©SHRM 2016


Ethics and Compliance Programs

The most effective ethics and compliance

programs are integrated closely with training and

development departments and with senior

management

HR professionals need to understand their

organizations’ ethics and compliance programs

requirements and be able to integrate them into

their ethical culture strategies

©SHRM 2016


Pay, Performance, Promotion, Procedures

The criteria for pay, performance, and promotion

should be made clear to all employees so that they

are perceived to be fair and consistently upheld

throughout the organization

One way to demonstrate that ethics matter is by

acknowledging, rewarding and/or promoting high

performers who live and model your organization’s

values and ethical standards

©SHRM 2016


Leadership Role-modeling

Leadership role-modeling of consistent

adherence to an organization’s rules,

procedures, and values is the linchpin

of an ethical workplace culture

Schedule regular ethics “reset”

sessions in which supervisors at all

levels are reminded of core values and

updated on organizational ethics issues

©SHRM 2016


Training and Development

Ethics training programs should emphasize

character formation, the resolution of

conflicting values, and a “calling” orientation

towards work and career

NBES Survey: The percentage of

companies providing ethics training

increased from 74% in 2011 to 81% in 2013

©SHRM 2016


Workplace Communications and Routines

The formal and informal communications of

employees’ day-to-day work experience are a

rich resource for shaping an ethical culture

Make use of organizational symbols and

ceremonies to express and reinforce

employees’ ethical expectations and

identification with your organization’s values

©SHRM 2016


Culture Surveys and Feedback Tools

Your employee satisfaction surveys should

include measures related to desired aspects

of an ethical culture

Always follow effective practice guidelines

when using survey data to help foster the

sense of fairness among employees

©SHRM 2016


Special Role of Top Managers

The tone set by top managers goes a long

way toward shaping the overall ethics of a

workplace

Executives who speak and act courageously

on behalf of the organization’s highest

ethical ideals represent the best form of

ethical leadership: personal example

NBES Survey: Senior managers are more

likely than lower-level managers to break the

rules

©SHRM 2016

36HR Ethical Workplace Strategies

Special Role of Top Managers

2015 ERC Report on Ethical Leadership

Companies that want to support strong ethical

leadership should:

• Seek out personal character when hiring and

make 24-7 integrity a job expectation

• Educate managers about the way employees

evaluate leaders

• Encourage leaders to share credit for success

and seek honest feedback from employees

• Annually review business objectives and

policies to ensure they promote ethical

performance

©SHRM 2016

37Ethical Practice as a Competency

www.shrm.org/hrcompetencies/documents

http://www.shrm.org/hrcompetencies/documents

©SHRM 2016


Characteristics of Ethical Practice

Definition: Integration of integrity and

accountability throughout all organizational

and business practices

Adherence to the organization’s core values

and ethical guidelines

HR professionals help to drive their

organizations’ ethical climate by responding

to ethical issues

©SHRM 2016


Behaviors at Highest Level of Proficiency

1) Maintains confidentiality

2) Responds immediately to all reports of

unethical behavior or conflicts of interest

3) Empowers all employees to report unethical

behavior without fear of reprisal

5) Acknowledges mistakes

6) Drives the corporate ethical environment

7) Recognizes bias in self and others and takes

measures to mitigate bias in business decisions

8) Maintains appropriate levels of transparency in

organizational practices

9) Ensures that all stakeholder voices are heard

10 Manages political and social pressures when

making decisions

©SHRM 2016

40The New SHRM Credentials

We’ve created the SHRM-CP and SHRM-SCP to:

o Encourage HR professionals to acquire the knowledge and behaviors that

drive effective performance and career success and contribute to positive

organizational outcomes;

o Establish a certification that is highly relevant to employers and meets the

needs of business;

o Grow certification in the HR profession; and

o Create a new and universal standard for HR

o Find out more at www.shrm.org/certification

40

http://www.shrm.org/certification

©SHRM 2016

41

HR must take a leading role in efforts to build ethical workplace cultures to

deter misconduct and help the organizational bottom line

Research shows that an ethical workplace culture improves company

performance, employee satisfaction, and provides many other benefits

An ethical workplace culture has six elements: Written standards, ethics

training, an internal reporting mechanism, an anonymous reporting

mechanism, disciplinary action, and ethics as part of performance appraisals

Onboarding and the other organizational levers outlined in this presentation

are key vehicles to use to advance ethical workplace strategies

Ethical practice is a critical competency for all HR professionals and is one of

the nine competencies required for SHRM Certification

Summary and Takeaways

©SHRM 2016

42SHRM Support Resources

www.shrm.org/hrdisciplines/ethics

HR Magazine article,

“Creating an Ethical Culture”

By Dori Meinert

www.shrm.org/publications/hrma

gazine

SHRM Code of Ethics for HR

Professionals

www.shrm.org/about/bylaws

SHRM Toolkit: Ethics and

Corporate Social Responsibility

www.shrm.org/templatestools/too

lkits

http://www.shrm.org/hrdisciplines/ethics

http://www.shrm.org/publications/hrmagazine

http://www.shrm.org/about/bylaws

http://www.shrm.org/templatestools/toolkits

©SHRM 2016

43SHRM 2016 Annual Conference

Join us June 19-22, 2016 in Washington, D.C. for the largest and best HR

event in the world. More information at www.shrm.org

©SHRM 2016

[email protected]

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Successful HR Strategies for Building an Ethical Workplace Culture · 2016-08-19 · Successful HR Strategies for Building an Ethical Workplace Culture ... Elements of an Ethical